By Paul Willcocks Tuesday, July 4, 2006, http://www.kelownadailycourier.ca/article_2436.php
The softwood deal that David Emerson and Stephen Harper are pushing is so bad it’s hard to imagine what they’re thinking.The U.S. lumber industry wins; Canada loses. Canadian companies hand over $1 billion to the U.S., with about half of it going directly to their American competitors – a reward for imposing duties that Canada and B.C. have claimed were illegal.In return, Canada gets pretty much nothing.B.C. and Canada had two objectives when the latest stage of this battle started four years ago. Free access to the U.S. market for our lumber, so companies could compete. And an agreement that would last long enough to let companies and communities plan and invest with some confidence.The proposed deal delivers neither. It does let Harper and George Bush talk about solving the trade dispute when they meet in Washington this week. Perhaps Harper hopes it will also increase the chances of co-operation on other issues. But for Canada’s forest industry and for communities that depend on the sector, it’s bad news.There is no free access. The agreement attempts to keep Canada’s share of the U.S. market below 34 per cent – about where it was under the former softwood deal that Canada considered unacceptable. The mechanism is different. The new deal uses timber prices to trigger trade barriers. When American prices are greater than $355 US per thousand board feet, Canadian companies would have free access to U.S. markets. Once they fall below that, the border would start to close.Canadian companies would have a choice under the deal. Companies in a region can agree to accept a quota on exports and pay smaller export charges. Or they can agree to pay higher export charges and ship without a quota. The export charges would be collected by Ottawa and probably shared with the provincial governments.The idea from the U.S. perspective is simple. Canadian companies will have to build the cost of the export duties into the price of the wood they send across the border. That will let U.S. producers keep their prices higher. The U.S. National Association of Homebuilders is forecasting that lumber prices could be about $315 by the time the deal is in effect. That would mean export duties of 15 per cent – more than the companies are paying now.That’s not even the worst part of the proposed agreement.The whole point of this exercise was certainty. B.C.’s forest industry depends on the U.S. market. Companies’ willingness to invest here is reduced when they must factor in the chance that the door to the major market could be closed with little warning.Instead of certainty, the deal offers a stopgap. It’s officially for seven years, but either side can opt and out and kill the deal in as little as three years. The industry – and governments – have no certainty. No worries, says Emerson. It’s a U.S.-Canada deal and neither government is likely to pull out. He can’t be serious. If the clause wasn’t likely to be used, the U.S. side wouldn’t be insisting that it be included. The American timber companies are a powerful political lobby. The agreement will be threatened the first moment they have the chance.And why not? Their tactics over the last four years have worked extremely well, keeping Canadian lumber out, prices high and producing a $500-million windfall.The deal is already under attack. The B.C. government and the province’s industry have sent a joint letter saying the agreement is unacceptable. They want, among other things, a slightly longer term. Companies can kill the agreement by refusing to drop their lawsuits over the current duties.But Emerson signed an agreement on behalf of Canada. The industry has to worry about his future attitude. And in any case, the U.S. negotiators can now just keep insisting Canada honour the commitment already made.Ottawa has fumbled, badly.Footnote: The bad deal is especially surprising because Canada seemed to be making steady progress in its legal efforts to fight the duties under NAFTA and through the World Trade Organization. The dispute was always most likely to be settled through negotiation, but legal victories had increased Canada’s bargaining position steadily, forcing the U.S. to lower duties.
2 comments:
The deal Harper has cobbled together in his rush to curry favour with Bush is an appalling one, for the reasons mentioned, and others.
When Harper takes this deal to Parliament, it deserves to be altered. The Bloc, NDP and Liberals have the majority of the seats in Parliament, and it is the duty of their MPs to act in the interests of Canada and their constituents.
If the Liberals allow this deal to go through (either by ineptitude – such as the last budget debacle, or disorganization – due to the leadership campaign absorbing so much of their efforts), then they deserve to be punished by the voters come the next election.
If course, if by their conduct Liberal MPs (especially the contenders for leadership of the party) show that their failure to stand up to Harper on yet another rushed exercise, springs from cowardice, then the voters should take note of this, and not grant them a government minority or majority until they acquire some intestinal fortitude.
This softwood deal is more of a test of the calibre of the Liberal leadership contenders, than of Harper. We have measured Harper, and he is wanting.
Now let us measure the Liberal Party, and see if they deserve the votes of Canadians.
The alternative to the craven New Tory party's capitulation to Bush on the softwood issue is very simple.
The NDP, Bloc and Liberals have the majority votes in Parliament. They could agree to pass legislation which would direct the government to table the following revised proposal with the Bush government:
1. Term - The term should be ten years, with no early termination possible unless both sides agree, and the Canadian government is to agree only if a majority of MPs through a free vote (on a non-party basis) in Parliament for an earlier renewal.
2. Automatic renewals - Renewal period should be for automatic five year periods, unless notice of termination is given by either side 12 months before the end of a term (and the Government of Canada would need a majority vote of MPs to give such notice, through a free non-party vote).
3. Payment - Full payment of the $5 billion (yes, that is right, the amount owed under the applicable laws), plus interest on overdue amounts at 5% p.a..
4. No litigation - American lumber companies to agree not to litigate the settlement.
5. Reaffirmation of NAFTA - American government to reaffirm its commitment to the NAFTA treaty.
6. Failure of US to agree -
a. Should the US government not agree to this proposal, then Canada to continue with litigation.
b. Canadian government to fund such litigation by Canadian companies.
c. If the USA takes steps to penalize lumber imports from Canada due to failure to reach agreement as above, the Canadian government is to appoint a Royal Commission with a mandate to review what steps should be taken by the Canadian government to uphold the NAFTA, including whether to terminate the NAFTA (what is the point of an agreement with a government which does not honour its commitments?).
d. Royal Commission to report by February 28 2007.
e. Canadian government to review the findings of the Royal Commission and take such steps as the majority of MPs agree to through a free non-party vote.
f. Canadian government would use taxpayers money to assist Canadian companies who needed assistance due to the non-payment by the Americans of the debt they are refusing to pay.
So, you see: the answer is really simple. All you need is a bit of backbone as the Prime Minister of a country which entered into a treaty with another government in full expectation that the other government would honour its obligations, and not welsh when it suited it.
Our MPs would be in a position where they could reflect the views of their various constituents, as the later votes would be a non-party vote on the issues set out above.
Who will take the lead to stand up for Canada?
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